Innovation Starts in China Before Expanding West: Zegna CEO

For Italian brand Ermenegildo Zegna, the focus is on innovations in China, its CEO Gildo Zegna hinted at the WWD Apparel and Retail CEO Summit yesterday. Zegna’s history in the China market started as early as 1991, as it was the first luxury apparel brand to enter the middle kingdom. Now, China has become the leading market by revenue for Zegna and is seen as a testing ground for its tech strategies. “We test new things in China first. If it works, we bring it to the world,” Zegna said. This has to do with the consumer culture in China – consumers are mobile-oriented, and as the typical luxury shoppers are younger than other markets, they are curious about innovation and are early adopters of changes within the brand. Like many other luxury brands, Zegna has undergone a series of digital revolutions in China to make as many as touch points as possible to connect with the consumers--from establishing a WeChat presence to forming strategic partnerships with Alibaba and JD.com. However, the CEO remains firm in the strategy of approaching digital as a service tool that revolves around the company’s core DNA. Besides digital innovation, the brand has also launched a product line for millennials called XXX Couture and has implemented special marketing campaigns specifically for China. It introduced two “Little Fresh Meat” stars, actor William Chan and singer Sehun, to be the faces of the line and hosted a big interactive three-day event in September, at which 500 fans could get a first glimpse of an exclusive China capsule collection and connect their WeChat IDs to interact with the brand. This collection was also launched at a virtual pop-up store on JD.com’s TopLife in October. Unlike other big luxury houses, Zegna’s in-house manufacturing enables the brand to actively react to market changes quickly. The CEO referred to the company’s streamlined production process as “from sheep to shop, from shop to screen.” This process has enabled the brand to approach collections not by season but on a project basis, or to release capsule collections at a higher frequency. Fueled by the athleisure trend, the traditional suit maker has also started to explore the potential of activewear in China and South Korea, and has a special team working on luxury sneaker designs; as the growth of streetwear consumption in China surpasses other fashion industries, the increasing exposure to urban clothing will make consumers open to the option of investing in a pair of higher-priced sneakers. However, all its focus on China doesn’t mean the brand is China-proof considering the current socio-economic landscape. The brand is reportedly approaching China more cautiously and is planning a more conservative budget for investment in the country next year, as the trade war with the U.S. is likely to continue to impact consumption, according to a recent interview with Bloomberg. In fact, the brand has seen slowing demand from China due to the trade war with the US. On the other hand, the yuan's depreciation has sent more shopping traffic to the domestic market than abroad, which has benefited the brand’s 50 stores across China. As much as its sales rely on China, so does its strategy, “It used to be West influences East; now it’s East to West,” the CEO said.

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Innovation Starts in China Before Expanding West: Zegna CEO